World Cup, euro zone crisis combine with high prices to create a lull
THE World Cup and the euro zone debt crisis have helped create a lull in the residential property market, experts say.
They also cite other reasons for the subdued activity, including high asking prices, a lacklustre stock market and the month-long June school holidays. The market is taking a much-needed breather after running too fast, too soon, they add.
Sales are down and some developers, particularly those selling high-end homes, have also retreated to the sidelines for now.
So far this month, there has not been a major launch to excite the market.
Sales at the 1,145-unit The Minton in Lorong Ah Soo slowed to 20 units over the past weekend, bringing total sales to 350 units. It sold about 300 units in the fortnight after its preview late last month. Average prices, though, have risen slightly to $865 per sq ft (psf), said developer Kheng Leong.
At the 72-unit Horizon Residences at Pasir Panjang Hill, buyers have picked up nine more units so far this month.
The project was also released for sale late last month. Sales hit 21 units that month, Urban Redevelopment Authority data shows. The average price so far is $1,396 psf, said Far East Organization.
At the 393-unit Flamingo Valley in Siglap, just two units were sold in the past fortnight, bringing the total to 50. The project sold 46 units last month, the same month it was released for sale.
Expected high-end launches such as Twin Peaks at Grange Road have yet to hit the market.
Mr Joseph Tan, CBRE's executive director of residential services, said: 'The market conditions for high-end are not conducive, so it's only prudent for developers to monitor the market.'
Still, the take-up of 1,078 new homes last month, while down from April, was healthy, he said.
'It shows the market is stabilising and prices are stabilising. That's generally good for everyone. If the lower take-up leads to the perception that there will be a drop in prices, the scenario is unlikely because most developers have to watch their bottom line and there's no necessity for them to adjust prices now,' he said.
Land prices have not dropped and demand is intact, as interest rates are still low, said another property expert, who asked not to be named.
'Buyers hoping for prices to come down may be disappointed. If there's any price correction, it will likely be small.
'The market has been running very fast in the first four months of the year,' said the expert. 'Prices also went up very quickly, especially in the mid- and mass- market sectors. It was quite unprecedented. It cannot continue.'
Recent launches such as The Vision in the West Coast, Waterbank at Dakota and Tree House at Chestnut Avenue have all achieved benchmark prices, he said.
Experts say launches are expected to pick up next month. The 172-unit Terrene and the 468-unit The Scala have been lined up to go on sale, while Waterfront Gold at Bedok Reservoir is likely to be launched soon.
Most developers will want to launch their projects before the Hungry Ghosts' Month starts on Aug 10, experts said.
Mr Peter Ow, Knight Frank's managing director of residential services, said: 'The market may seem exceptionally quiet this month, but it is still doing well. Demand is still there and prices will hold as long as the economy continues to grow, and interest rates are still low.'
Source: Straits Times, 22 Jun 2010